NYSE Wants Money Back, Grasso Digs In

Mar 1st 2004

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Former New York Stock Exchange chairman Richard Grasso has let the Big Board know that he has no intention of returning any of the $139.5 million in retirement pay that led to his resignation last fall and he still intends to seek the $57.7 million he thinks he is owed.

In a letter from his attorney Brendan V. Sullivan, Grasso says he "has no intention of returning any portion of his compensation to the Exchange," and that "if the Exchange believes it has a valid claim, it should file it, rather than conducting a campaign through the press…in an attempt to pressure Mr. Grasso." The letter was first reported last week by the Washington Post and Financial Times.

The exchange of letters began with a missive from interim NYSE Chairman John Reed, who served after Grasso until new chief executive, John Thain, began his tenure. Reed’s letter demanded that Grasso return $120 million to the Exchange, which signifies that the Exchange is making its own effort to recoup some of the funds while state and federal regulators investigate the matter.

The Exchange has good cause for concern since Grasso seeks not only to keep the $139.5 million he received last year but an additional $57.7 million he thinks he is owed, which consists of $48 million in future retirement pay allegedly promised by his contract and $9.7 million in severance pay if it is determined that his ouster was in fact a firing.

The NYSE board voted Jan. 8 to send a report on the matter prepared by former prosecutor Dan K. Webb to New York State Attorney General Eliot Spitzer and to the Securities and Exchange Commission, both of whom are investigating Grasso’s compensation package, the Wall Street Journal reported. At question is whether state nonprofit laws, under which the Big Board is incorporated, or federal securities laws were broken.

Until recently, the most that any NYSE official had to say about the matter was when Reed called it "an embarrassment." This week Thain went on record saying he wants the Exchange to recoup "very substantial return" of the "excessive" payout made to Grasso, the Journal reported.